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Learn to use property tax rates and land values to calculate your tax. View examples for both land use categories, including how the 4% cap is applied.
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What is property tax
Property tax is a tax which eligible first home buyers chose to pay instead of an upfront transfer duty (previously known as stamp duty). They will pay an annual property tax for the duration of their ownership of the property.
Property tax rates and land values
Your annual property tax liability will be based on the land value of the opted-in property (at the beginning of the previous financial year).
The property tax rates for 2025-26 are:
Land use category
2025/2026 fixed component
2025/2026 land value rate (variable component)
Residential land that is owner-occupied
$451.85
+
0.323% of land value
Residential land that is not owner-occupied
$1,694.45
+
1.187% of land value
Reassessments and pro rata provisions
Where an included owner advises of changes part-way through a financial year, pro rata provisions will apply.
The due date(s) provided for payment will be dependent on the time of year a reassessment is issued, however will still align with the quarterly instalment due dates provided in the Property Tax (First Home Buyer Choice) Act 2022.
Pro rata provisions will be based on the number of days in the year for which a property has been owned and/or the number of days the property has been identified under each category of land use.
Property tax rates for prior years
Both the fixed component and land value rate will be indexed annually, starting 1 July 2024 as per Schedule 2 of the Property Tax (First Home Buyer Choice) Act. This ensures the average property tax payment rises in line with average incomes.
The fixed component and land value rate are calculated using the Gross State Product Per Capita/Land Value Indexation factors for the current financial year.
Year
2025 Gross State Product Per Capita Indexation factor
Land Value Indexation factor
2025
1.031974124
1.081568399
2024
1.094633
0.968094
2023
Not applicable
Not applicable
2022
Not applicable
Not applicable
Examples of how these indexation factors are used for the calculation of property tax can be found below.
The fixed component for a financial year is calculated by multiplying the fixed component of the previous financial year by the Gross State Product Per Capita Indexation factor for the financial year.
Fixed component amount for a financial year = Fixed component amount for the previous financial year x Gross State Product Per Capita Indexation factor for the financial year
The land value rate is calculated by multiplying the land value rate for the previous financial year by the Gross State Product Per Capita Indexation factor for the financial year and dividing by the land value indexation factor for the financial year.
Land value rate = Land value rate for the previous financial year x Gross State Product Per Capita Indexation factor for the financial year ÷ Land Value Indexation factor for the financial year
A 4% cap was legislated to provide assurance to first home buyers who opted into property tax, that their annual liability for a particular lot of land will not increase by more than 4% even if their land value increases by more than this margin. To be eligible for the 4% cap, the property must have been used for the same purpose for at least a portion of the previous year (owner occupied/not owner occupied).
Being a pro rata tax, this can result in a 4% cap being applied to a property tax liability for all or part of a financial year depending on changes in land use from one year to the next, and the number of days the land use applies.
The 4% cap is not applicable for the first year of paying property tax as there is no previous year’s calculation to apply the cap to.
Revenue NSW will determine whether the current year’s liability is lower than the previous year’s (inclusive of the 4% cap that has been applied), and a Notice of Assessment is issued for the lesser liability of the two.
Where the ownership and land remain consistent from one financial year to the next, if the included owner:
has the same land use for the entire current financial year as they had in the previous year, they will receive the full benefit of the 4% cap. (See below Fig 1.1 and 1.2)
changes their land use for the entire current financial year as compared to the previous year, they will not receive the benefit of the 4% cap. (See below Fig 2.1 and 2.2)
changes their land use partway through the current financial year, they will receive the benefit of the 4% cap only for the portion of the year where the land use is the same as they had in the previous year. (See below Fig 2.3 and 2.4)
has both classes of land use in the current and previous financial year, the 4% cap will be applied on each usage. (See below Fig 2.5)
Note: There are some differences in the way the 4% cap applies where the land is mixed use, or has been subdivided or consolidated.
Single use and change of use
Single use
Figure 1.1
Previous year
Current year
Land use
Days
Land use
Days
4% cap
Owner occupied
365
Owner occupied
365
Applicable
Figure 1.2
Previous year
Current year
Land use
Days
Land use
Days
4% cap
Not owner occupied
365
Not owner occupied
365
Applicable
Change of use
Figure 2.1
Previous year
Current year
Land use
Days
Land use
Days
4% cap
Not owner occupied
365
Owner occupied
365
Not applicable
Figure 2.2
Previous year
Current year
Land use
Days
Land use
Days
4% cap
Not owner occupied
365
Owner occupied
365
Not applicable
Figure 2.3
Previous year
Current year
Land use
Days
Land use
Days
4% cap
Owner occupied
365
Owner occupied
100
Applicable
Not owner occupied
265
Not applicable
Figure 2.4
Previous year
Current year
Land use
Days
Land use
Days
4% cap
Not owner occupied
365
Not owner occupied
165
Applicable
Owner occupied
200
Not applicable
Figure 2.5
Previous year
Current year
Land use
Days
Land use
Days
4% cap
Owner occupied
250
Owner occupied
85
Applicable
Not owner occupied
115
Not owner occupied
280
Applicable
Land value FY 2022/23: $1,000,000
Usage (days of the year)
Base annual liability
Pro rata liability (i.e. based on current usage and inflated land value)
Owner occupied - 200
$400 + ($1,000,000 x 0.003%) = $3400
$1863.00
Not owner occupied - 165
$1500 + ($1,000,000 × 0.011%) = $12,500
$5650.70
4% cap on above figures (used for 2024 FY): Owner occupied - $3536 Not owner occupied - $13,000
Total payment: $7513.70
Land value FY 2023/24: $1,100,000
Usage (days of the year)
Base annual liability
Pro rata liability (i.e. based on current usage and inflated land value)
4% increase on prior year pro rata for current year (i.e. dependant on previous year’s usage and independent of inflated land value)
Owner occupied - 100
$3,700 (a)
$1011.00 (e)
$966.10 (g)
Not owner occupied - 266
$13600 (b)
$9,884.20 (f)
$9448.10 (h)
4% cap on above figures (used for 2025 FY): Owner occupied - $3,848 (c) Not owner occupied - $14,144 (d)
Pro rata total payment: $10,895.20
4% Pro rata total payment: $10,414.20
For the FY 2023/2024, the pro rata total of $10,895.20 is higher (based on inflated land value) than the 4% pro rata total of $10,414.20 (based on a 4% increase on the previous year’s usage, dependant solely on the current year’s usage and independent of inflated land value). Payment will always be the lesser, in this case the capped 4% pro rata total, that is $10,414.20.
$400 + ($1,100,000 × 0.003) = $3,700
$1500 + ($1,100,000 × 0.011) = $13,600
104% × $3,700 = $3848
104% × $13,600 = $14,144
$3,700 × (100÷366) = $1011.00
$13,600 × (266÷366) = $9884.20
104% × $3400 × (100÷366) = $966.10
104% × $12,500 × (266÷366) = $9448.10
Land value FY 2023/24: $1,040,500
Here we look at the same scenario as above, however the land value has inflated less, at 4.05% (to $1,040,500) FY 2023/24.
Usage (days of the year)
Base annual liability
Pro rata liability (i.e. based on current usage and inflated land value)
4% increase on prior year pro rata for current year (i.e. dependant on previous year’s usage and independent of inflated land value)
Owner occupied - 100
$3,521.50 (a)
$962.15 (e)
$966.10 (g)
Not owner occupied - 266
$12,945.50 (b)
$9,408.45 (f)
$9448.10 (h)
4% cap on above figures (used for 2025 FY): Owner occupied - $3,662.40 (c) Not owner occupied - $13,463.40 (d)
Pro rata total payment: $10,370.60
4% pro rata total payment: $10,414.20
Now the pro rata total of $10,370.60 is lower than the 4% pro rata total amount of $10,414.20. As land inflation has not been sufficient to overcome the 4% pro rata total capping, amount due will again be the lesser, $10,370.60.
Notices of investigation are sent to property tax customers after an investigation has commenced on their land ownership. This ensures customers understand their obligations, comply with legislation, and have an opportunity to advise of a change in circumstances.
If you purchased an off-the-plan property and the confirmed land value exceeds your expectations, you can request to opt out of property tax. You must notify Revenue NSW within 28 days of settlement for your situation to be considered.
An application to withdraw from property tax must be made in writing with documentary evidence to support the extenuating circumstances preventing you from paying property tax. The application must be submitted by your solicitor or conveyancer via eDuties. If your request is approved, Revenue NSW will re-assess the transfer duty and issue you with a Duties Notice of Assessment that will include a due date for payment.
